Dish Network shutting down a third of all remaining Blockbuster stores

As reported initially during January, Dish Network has finally decided on the number of Blockbuster retail locations to close. Mentioned within Dish Network’s announcement regarding fourth quarter profits earlier today, the satellite service provider will be closing 500 Blockbuster stores across the United States during the first half of 2012. This will reduce the number of remaining Blockbuster stores by roughly 33 percent, dropping from 1,500 locations down to just 1,000 storefronts. Store closures were made for several reasons, but the most prominent was a downturn in store-level financial performance due to competition from Redbox and Netflix.

When Dish Network purchased Blockbuster during April 2011, the company stated that it would keep 90 percent of the 1,700 retail locations open to the public. After announcing the closure of 200 stores during July 2011, the additional 500 stores brings the total number of retails locations left at just 59 percent of the original figure.

With the closure of these additional 500 stores, Dish Network plans to let go approximately 4,000 to 5,000 employees working in retail locations. Prior to the bankruptcy procedure and subsequent Dish Network buyout, Blockbuster had over 4,000 retail locations and employed over 60,000 employees at the company’s peak of profitability.

While the Blockbuster segment of Dish Network is currently operating at a break even point, Dish Network officials are looking to the Blockbuster Movie Pass and Blockbuster@Home streaming video to make up for losses at retail locations as well as losses in the total number of Dish Network subscribers. According to Dish Network CEO Joe Clayton, he stated “By introducing new Blockbuster-branded services, we’ve begun to turn the tide in subscriber losses while continuing to face increased competitive pressures. The Blockbuster brand is a significant brand in the marketplace, which focuses on family and movies. And that’s clearly what Dish is all about.”

With retail locations of the Blockbuster rental chain dwindling, the Blockbuster Express kiosk program is likely going to keep expanding. By the end of 2011, there were over 11,000 Blockbuster Express kiosk locations within the United States. However, Coinstar’s Redbox dominates the retail space with over 35,000 kiosks by the end of December 2011 according to a recent fourth quarter earnings call.

Similar to Blockbuster’s previous strategy of opening retail locations that operate at a loss in order to drive out independent movie rental chains, Redbox eliminated Blockbuster’s retail locations by surrounding the stores with the red kiosks. The low price of Redbox rentals in addition to the cheap cost of DVD-by-mail plans from Netflix destroyed any chance for the retail giant to return to profitability.

While Dish Network added 22,000 subscribers during the fourth quarter of 2011, the company lost a total of 166,000 subscribers over all of 2011. During 2010, the company had added approximately 33,000 subscribers over the entire year. Attempting to attract new consumers during 2012 with the lure of fancy hardware, Dish Network announced a whole-home solution for Dish Network subscribers during CES 2012. Called the Hopper, the 2TB set-top box comes with 3 tuners for recording up to 250 hours of high definition video or 1,000 hours in standard definition. However, one of the tuners is specifically designed to record all four major broadcast networks (ABC, CBS, FOX and NBC) during primetime hours.

Called “Primetime Anywhere,” the Hopper records up to eight days of network primetime content and the additional two tuners can record two more channels during the same time period. The Hopper also offers Bluetooth for wireless headphones, picture-in-picture functionality and Blockbuster@Home compatibility. In addition, Dish Network is pairing the Hopper with a much smaller, set-top box called the Joey. When linked up to the Hopper through a home’s existing coaxial wired connections, the Joey can view the recorded content on the Hopper as well as act as a stand-alone satellite receiver. However, Dish Network hasn’t announced a price on the two boxes or a release date.